Citation Nr: 0213827
Decision Date: 10/07/02 Archive Date: 10/10/02
DOCKET NO. 00-20 758 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in St.
Petersburg, Florida
THE ISSUE
Entitlement to waiver of recovery of an overpayment of
improved pension benefits in the amount of $14,457, to
include the issue of whether waiver of recovery of the
overpayment is precluded by bad faith, fraud or
misrepresentation.
(The issue of entitlement to compensation under the
provisions of 38 U.S.C.A. § 1151 for additional disability as
a result of prostate surgery at the Miami VA Medical Center
in October 1997 will be the subject of a later decision.)
REPRESENTATION
Appellant represented by: The American Legion
WITNESS AT HEARING ON APPEAL
Appellant
ATTORNEY FOR THE BOARD
K. J. Alibrando, Counsel
INTRODUCTION
The veteran served on active duty from April 1953 to April
1955.
This case came to the Board of Veterans' Appeals (Board) on
appeal from a January 2000 decision of the St. Petersburg,
Florida Regional Office's (RO) Committee on Waivers and
Compromises (Committee), which denied the veteran's request
for waiver of recovery of an overpayment of improved pension
benefits in the amount of $14,457. The veteran testified at a
hearing before a Hearing Officer at the RO in June 2001.
The Board is undertaking additional development on the issue
of entitlement to compensation under the provisions of 38
U.S.C.A. § 1151 for additional disability as a result of
prostate surgery at the Miami VA Medical Center in October
1997 pursuant to authority granted by 67 Fed. Reg. 3,099,
3,104 (Jan. 23, 2002) (to be codified at 38 C.F.R. §
19.9(a)(2)). When it is completed, the Board will provide
notice of the development as required by Rule of Practice
903. 67 Fed. Reg. 3,099, 3,105 (Jan. 23, 2002) (to be
codified at 38 C.F.R. § 20.903). After giving the notice and
reviewing any response to the notice, the Board will prepare
a separate decision addressing this issue.
FINDINGS OF FACT
1. In October 1997, the veteran submitted a claim for
nonservice-connected pension benefits and reported that he
was unemployed and that his spouse's only source of income
was Social Security benefits.
2. The veteran was awarded VA improved pension benefits
effective November 1, 1997; he was informed in VA letters and
by VA Form 21-8768, that he was obligated to provide prompt
notice of any change in income or net worth and that a
failure to provide such would result in the creation of an
overpayment which would be subject to recovery.
3. In a February 1998 Improved Pension Eligibility
Verification Report (EVR), the veteran reported that he had
earned income from employment as a bus driver.
4. In August 1999, the RO retroactively terminated the
veteran's improved pension benefits effective November 1997,
creating an overpayment in the amount of $14,457.
5. In an October 1999 Financial Status Report, the veteran
reported that his spouse's income included both Social
Security benefits and retirement benefits.
6. The veteran engaged in willful misrepresentation of
material facts with the intent of retaining VA benefits that
he was not entitled to receive.
CONCLUSION OF LAW
Waiver of recovery of an overpayment in the amount of $14,457
of the veteran's improved pension benefits is precluded by a
finding of misrepresentation on the part of the veteran. 38
U.S.C.A. § 5302(a) (West 1991); 38 C.F.R. § 1.965(b) (2001).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
On November 9, 2000, the President signed into law the
Veterans Claims Assistance Act of 2000 (VCAA), which
redefined VA's duty to notify and to assist claimants for VA
benefits. See 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107,
5126 (West Supp. 2002). See 66 Fed. Reg. 45,620-32 (Aug. 29,
2001) (to be codified as amended at 38 C.F.R. §§ 3.102,
3.156, 3.159, and 3.326) (regulations implementing the VCAA).
The United States Court of Appeals for Veterans Claims
(Court) has held that the notice and duty-to-assist
provisions of the VCAA do not apply to claims for waiver of
recovery of overpayments. Barger v. Principi, 16 Vet. App.
132 (2002).
The veteran seeks waiver of recovery of an overpayment of
pension benefits in the amount of $14,457. In the January
2000 Waiver Decision, the Committee initially determined that
waiver of recovery of the overpayment was not precluded by
bad faith, fraud or misrepresentation on the part of the
veteran. It was concluded that recovery of the debt would
not be against the standards of equity and good conscience.
Following the testimony of the veteran in June 2001, the
Committee issued a supplemental statement of the case
indicating that the Committee determined that waiver of
recovery of the debt was precluded by misrepresentation on
the part of the veteran.
A waiver of an overpayment of improved pension benefits may
be authorized in a case in which collection of the debt would
be against equity and good conscience. 38 U.S.C.A.
§ 5302(b). In essence, "equity and good conscience" means
fairness to both the appellant and to the government. 38
C.F.R. § 1.965(a). However, a finding of fraud,
misrepresentation and/or bad faith on the part of the veteran
precludes consideration of waiver of recovery of the debt.
38 C.F.R. § 1.965(c). In other words, if fraud,
misrepresentation, or bad faith is found, the elements of the
standard of equity and good conscience are not for
consideration, since the granting of waiver of recovery is
precluded.
"Bad faith" denotes unfair or deceptive dealing by one who
seeks to gain thereby at another's expense. Thus, a debtor's
conduct in connection with a debt arising from participation
in a VA benefits/services program exhibits bad faith if such
conduct, although not undertaken with actual fraudulent
intent, is undertaken with intent to seek an unfair
advantage, with knowledge of the likely consequences, and
results in a loss to the Government. 38 C.F.R. § 1.965(b)(2)
(2001). For misrepresentation, there must be willful
misrepresentation of a material fact. The misrepresentation
must be more than non-willful or mere inadvertence. 38
C.F.R. §§ 1.962(b), 1.965(b). It should be emphasized that
only one of the three elements (fraud, misrepresentation, or
bad faith) need be shown to preclude consideration of waiver
of recovery of an overpayment or waiver of collection of any
indebtedness. 38 U.S.C.A. § 5302(c) (West 1991).
In October 1997, the veteran submitted a claim for non-
service connected pension benefits, to include special
monthly pension benefits on the basis of being housebound or
in need of aid and attendance, in lieu of his current 10
percent service-connected disability compensation. He
indicated that he was currently hospitalized for prostate
cancer and hypertension. With that claim, he submitted VA
Form 21-527, Income-Net Worth and Employment Statement. He
indicated that he had been employed as a bus driver but had
not worked since May 1997 due to prostate cancer. He stated
that he had no monthly income and that his spouse's only
income was $400 in Social Security benefits. He also
indicated that he had applied for Social Security benefits
and anticipated that benefits would begin in the next couple
of months.
By rating action in December 1997, the RO granted entitlement
to nonservice-connected pension benefits, to include special
monthly pension because of the need for aid and attendance,
effective from October 28, 1997.
By letter dated in December 1997, the RO notified the veteran
of the grant of pension benefits and that pension would be
paid as the greater benefit. He was advised that the rate of
pension was dependent on his income. He was also advised
that he should report any change in income, dependents or net
worth. He was told to immediately report when he began to
receive Social Security benefits. Included with the notice
was VA Form 21-8768 which included information regarding
income reporting requirements.
In February 1998, the veteran submitted an EVR. He reported
that from January to December 1998 he earned wages of $31,000
and that from January to December 1999 he would earn $5,166.
He reported that his spouse's only source of income was $610
per month in Social Security benefits.
By letter dated in June 1999, the RO notified the veteran
that he had provided conflicting information regarding his
income from November 1997 to date. The income he reported on
the February 1998 EVR was noted. He was requested to furnish
a statement from his last employer regarding income and the
date his employment terminated. He was also requested to
furnish a copy of his spouse's Social Security award letter.
He was advised that failure to provide this information would
result in a return to the 10 percent compensation rate
effective November 1, 1997.
By letter dated in August 1999, the RO notified the veteran
that his disability compensation award had been reestablished
effective on November 1, 1997. It was noted that evidence
had been received showing that his income had changed and
that he had not responded to the letter dated in June 1999.
In October 1999, the veteran submitted VA Form 20-5655,
Financial Status Report, in connection with he request for
waiver of recovery of the overpayment of pension benefits.
He reported that he was receiving Social Security benefits in
the amount of $801 per month and VA compensation of $96 per
month. He also reported that his wife was receiving Social
Security benefits of $568 per month and retirement benefits
of $1,131 per month. He stated that he had worked as a bus
driver from January 1998 to March 1999.
In May 2001, the veteran submitted copies of W-2 forms
showing that he earned wages in 1999 and had no wages in
2000.
In June 2001, the veteran testified that he was aware that if
there were changes in his income he was supposed to notify
the VA. He indicated that the overpayment was his fault. He
was unable to explain why he did not initially report his
wife's retirement income and indicated that it could have
been a mistake. He also indicated that his wife had told him
that she did not want her income reported. He testified that
he did not intend to misrepresent himself and that not
reporting her income was a careless mistake. He testified
that he was not trying to get more money from the government.
He testified that he took a leave of absence from his job at
the time of the surgery in October 1997 and indicated that he
was off work for approximately two months. He testified
that, at the time of the October 1997 surgery, he told his
doctor what kind of work he did and asked when he would be
able to go to work. He stated he did not hide the fact that
he was employed. He testified that he worked in 1998 but did
not work in 1999.
After consideration of the record, including the testimony of
the veteran, and the applicable regulatory provisions, the
Board finds he engaged in willful misrepresentation of
material facts with the intent of retaining VA benefits that
he was not entitled to receive. On his application for
pension benefits, the veteran stated that he was not employed
due to being disabled. It was later discovered that he was
in fact employed. He testified that while he took a leave of
absence from his employment at the time of prostate surgery
in October 1997, he was in fact employed. He testified that
he did not attempt to hide the fact that he was working to
his doctor. The record also indicates that he failed to
report his wife's total income by failing to report her
retirement income received in addition to Social Security
benefits. He has acknowledged that he was aware of the
reporting requirements but failed to accurately report her
income.
The Board finds that the actions of the veteran constituted
misrepresentation of material facts. As a result of the
veteran's misrepresentation, the overpayment in the amount of
$14,457 was created. By failing to truthfully report his
employment status and to accurately and fully report his and
his spouse's income, the veteran concealed relevant financial
information. The Board simply does not believe his testimony
that he did not intend to misrepresent his employment status
or his total income during the period in question. The
veteran's actions cannot be deemed to be non-willful or mere
inadvertence. The Board finds that the veteran purposely did
not inform the VA that he was employed at time he submitted
his claim for pension in October 1997 and that he did not
accurately report his spouse's income in 1997 in order to
obtain and maintain receipt of VA improved pension benefits.
He testified that he was truthful with his doctor regarding
his employment status but the record clearly shows that he
maintained to the VA that he was unemployed when he applied
for pension benefits. He did not inform that VA of his
wife's retirement income until he submitted his financial
status report in 1999. The evidence clearly shows that the
veteran willfully refused to inform the VA accurately of his
employment status and total income so that he could
wrongfully obtain VA pension benefits to which he was not
entitled and to continue receiving VA benefits in excess of
those he was entitled to receive. As such, the Board finds
that he did in fact willfully misrepresent material facts.
Likewise, the Board does not find that the veteran lacked the
requisite knowledge of the likely consequences of failing to
report his and his spouse's income. As indicated, he was
fully aware of the reporting requirements, and his
affirmative report of no income when he was receiving income
was not mere inadvertence. Cf. 38 C.F.R. § 1.962(b) (2001).
In light of the foregoing, the Board finds that the
preponderance of the evidence is against the veteran's claim
for waiver. It establishes that the veteran misrepresented
his and his spouse's income to VA on his October 1997
application for pension and on the February 1998 EVR. His
actions constitute misrepresentation in his dealings with VA.
The overpayment of VA benefits resulted from these
misrepresentations on the part of the veteran, and waiver of
this debt is precluded by law, regardless of the veteran's
current financial status or any of the other elements of the
standard of equity and good conscience. 38 U.S.C.A.
§ 5302(c); 38 C.F.R. § 1.965(b).
ORDER
Waiver of recovery of an overpayment in the amount of $14,457
of the veteran's improved pension benefits is precluded by a
finding of misrepresentation on the part of the veteran.
J. SHERMAN ROBERTS
Member, Board of Veterans' Appeals
IMPORTANT NOTICE: We have attached a VA Form 4597 that tells
you what steps you can take if you disagree with our
decision. We are in the process of updating the form to
reflect changes in the law effective on December 27, 2001.
See the Veterans Education and Benefits Expansion Act of
2001, Pub. L. No. 107-103, 115 Stat. 976 (2001). In the
meanwhile, please note these important corrections to the
advice in the form:
? These changes apply to the section entitled "Appeal to
the United States Court of Appeals for Veterans
Claims." (1) A "Notice of Disagreement filed on or
after November 18, 1988" is no longer required to
appeal to the Court. (2) You are no longer required to
file a copy of your Notice of Appeal with VA's General
Counsel.
? In the section entitled "Representation before VA,"
filing a "Notice of Disagreement with respect to the
claim on or after November 18, 1988" is no longer a
condition for an attorney-at-law or a VA accredited
agent to charge you a fee for representing you.